Consumer choice: Nicandro Durante says he never has ethical concerns about selling tobacco

It is hard to keep up with Nicandro Durante. The first non-Briton to run British American Tobacco, he speaks English with the thick, distinctive nasal tone of his native São Paulo, which can make it difficult for non-Portuguese speakers to understand him.

Such contradictions, however, are also emblematic of Mr Durante. Paulistas have a reputation for brash, larger-than-life personas, embodying the national characteristic known as jeito brasileiro, which is roughly analogous to street smarts or cunning in business.

Mr Durante could not seem more different. The chief executive of the world’s second-largest tobacco company by sales is dressed in a technocratic garb of dark suit, white shirt and blue tie. His panoramic office at Globe House, BAT’s eight-storey headquarters on London’s Embankment, is similarly more functional than personal.

In spite of his accent and his low-key nature – one possible reason why he has done so few interviews with the English-language media, even though the company he runs is listed on the FTSE 100 and is based in London – Mr Durante has long been used to making his presence felt.

When he was 17 he set the tempo for the youth team at Corinthians, one of Brazil’s biggest football clubs, as a central midfielder. “I did all the running,” he says.

The routine persists but his focus now is marathon running, waking up at 5.30am every day to train.

Despite his fitness kick, Mr Durante is also a smoker. Up to four times a week he lights up a cigar, usually with a glass of red wine. “I know the risks associated with cigars but the pleasure it gives me and that moment – it outstrips the risks,” he says.

Is he addicted?

“If I want to stop smoking cigars I stop,” he says. “I don’t smoke full-time – I smoke three to four cigars a week but I can go one or two weeks without smoking . . . I smoked cigarettes and decided to stop when I started cigar.”

That may be the case but not everyone displays such fortitude when it comes to addiction. The company is part of an industry that is responsible for one in 10 of the planet’s adult deaths, according to the World Health Organisation.

Despite this, he defends the sector in a measured, sanguine voice. “I think we are a very ethical industry and a very responsible industry,” he says. “It’s a risk product and I think regulation is good . . . we were pioneering campaigns about the dangers of tobacco [so] I don’t have any problem with that.”

Plain packs, as the proposals are called, will in reality be anything but. While cigarette brand names will be allowed only in small, standardised fonts, most of the package will be taken up by gruesome images of tobacco-related diseases: blackened lungs, rotting teeth and gangrenous feet.

Big Tobacco has not taken the move lightly. The four biggest companies – Philip Morris, BAT, Japan Tobacco and Imperial Tobacco – are pursuing legal action against the Australian government, claiming that this is a case of theft of their intellectual property.

“We have to dispel some of the myths against the industry,” says Mr Durante. “We are not against regulation, we are against bad regulation, and plain packaging is not going to meet public health goals.”

Nonetheless, both the industry and his company are in rude health. Last year BAT made £4.9bn in pre-tax profits, a £600m increase on the year before, on turnover not far short of £50bn.

In times of recession, tobacco equities are seen as the classic defensive stock. The investment logic is that although the world’s smokers might trade to cheaper brands, they are unlikely to stub their cigarettes out altogether. Accordingly, BAT shares, in common with those of its competitors, can virtually guarantee a certain amount of earnings per quarter.

“They are the closest thing to a government bond in the equity market,” says Martin Deboo, an analyst at Investec.

Another spur is the fast growth in the numbers of smokers in emerging markets led by Indonesia, Brazil, Russia, Turkey and Nigeria, where nearly 80 per cent of the world’s 1bn smokers reside and where BAT, which has operations in 180 countries, earns more than two-thirds of its revenues.

Unsurprisingly, the appointment of a Brazilian as chief executive 18 months ago was regarded by many as a natural fit. And he says that for him personally, the appointment was the “icing on the cake”.

Mr Durante’s parents, from the Lazio region near Rome, moved to São Paulo during the 1950s during a peak in European migration to South America. His father worked with the shipping industry before taking up a job with the Italian tyre company Pirelli.

After joining the industry 30 years ago, following stints in finance for two local companies, Mr Durante moved to Rio de Janeiro and joined Souza Cruz, the Brazilian tobacco company that later became BAT’s largest subsidiary.

He was subsequently moved to offices in Asia, Africa and the Middle East, where he gained a reputation for aggressively expanding the market share of BAT’s cigarette brands such as Dunhill and Lucky Strike.

“We have a very good footprint in those kinds of developing-world markets,” says Mr Durante. “The business is growing faster on volumes and also on profitability because the margins get better over time reflecting [more] purchasing power, disposable income and population growth.”

Amid such battles Mr Durante has also begun forging his legacy in a more counter-intuitive business: cigarette substitutes.

Last year, in part to manage declining smoking rates in the west, Mr Durante set up Nicoventures, a business division that has invested £100m in finding healthier ways of satisfying smokers’ cravings. It plans eventually to launch a nicotine inhaler.

“The future is about winning consumer moments,” he says. “There will be consumers who go for a cigarette, [or] a non-combustible product and consumers who go for a nicotine-based product – so this is something we have paid a lot of attention to.”

In the nearer term, however, he is focused on expanding the company’s tobacco portfolio – and combating what the company sees as overzealous regulation.

“I don’t think non-smokers should be exposed to smoke but I think we can find a solution to allow both kinds of people to enjoy what they want [such as having] separate areas,” he adds. “Smokers should have the same rights that non-smokers have.”

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The World Health Organization (WHO) continues to stand with Australia as it resists the tobacco industry’s efforts to prevent plain packaging of tobacco products.

“Australia scored a major victory when its highest court recently upheld the country’s novel plain packaging law,” said Dr Shin Young-soo, WHO Regional Director for the Western Pacific, during the sixty-third session of the WHO Regional Committee for the Western Pacific. “But the industry is suing in other venues. The fight isn’t over, and neither is WHO’s solidarity with Australia. The Regional Committee, WHO’s governing body in the Western Pacific, emphasizes the need to resist and counteract tobacco industry interference with full implementation of the WHO Framework Convention on Tobacco Control.”

Plain packaging refers to standardized packaging that requires removal of all branding-colours, imagery, corporate logos and trademarks-allowing tobacco manufacturers to print only the brand name in a mandated size, font and place on the pack, in addition to health warnings, including information on toxic elements.

The tobacco industry is lobbying aggressively to maintain its profits at the expense of public health. Australia is the first country to require tobacco products to be sold in plain, brand-free packs. The industry would like to smother the Australian law before other countries adopt it.

The Regional Committee reviewed progress made on tobacco control in the Region, including implementation by Member States of the Regional Action Plan for the Tobacco Free Initiative in the Western Pacific (2010-2014).

Tobacco use is one of the leading preventable causes of death. One third of the world’s smokers reside in the Western Pacific Region, where it is estimated that two people die every minute from tobacco-related disease.

The prevalence of tobacco use among adults is falling in 21 of the Region’s 37 countries and areas. In response, the industry has been focusing more attention on enticing youths to use tobacco.

However, in eight Pacific island countries in particular, there is an upward trend because of cheap and easily accessible cigarettes. To counter rising tobacco use, WHO’s Pacific Tobacco Taxation Project (PTTP) was launched recently to provide country-level support for raising prices and taxes of tobacco to significantly reduce tobacco consumption and the corresponding risk of noncommunicable diseases. Studies show that increasing the price of tobacco through higher taxation is the single most cost-effective way to bring down consumption and encourage smokers to quit.

The Regional Action Plan sets a target of a 10% reduction in tobacco use prevalence in adults and youth for smoked and smokeless tobacco in Member States before 2015. While there has been good progress in many countries and areas, Dr Shin said stronger demand-reduction efforts are needed, such as increasing tobacco prices and taxes and using graphic pictorial health warnings. The action plan also serves as a guide for the complete implementation of the WHO Framework Convention on Tobacco Control, developed in response to the globalization of the tobacco epidemic.

The Regional Committee, which meets annually to review WHO’s work in the Western Pacific, urged Member States to take strong action to support:

• demand-reduction measures related to tobacco prices and taxes;

• pictorial health warnings;

• 100% smoke-free indoor policies;

• bans on advertising, promotion and sponsorship, including through plain packaging

The Philippine tobacco industry is expected to churn out 5.4 billion packs of cigarettes this year for a market that only consumes about 3.5 billion packs annually.

Granted that the market demand is met this year, that would leave almost 2 billion packs of cigarettes in tobacco factories. So why is such an industry tolerating such an excess, and where are these extra packs going to go?

These are the questions that the World Health Organization, through its Tobacco Free Initiative, seeks to find out, even as it urged the government not only to launch an investigation into the phenomenon but also continue with its thrust toward higher taxes for cigarettes.

“Who’s gonna smoke all these if the market is 3.5 billion? Why are they producing so much? How much are they going to produce next year and is this [overproduction] because of the tax increase… This needs to be investigated carefully,” asks Dr. Aida Yurekli, coordinator at the WHO-TFI.

Yurekli says the WHO began to observe such overproduction, or “frontloading,” of cigarettes as early as 2009 through a survey that the organization conducted in the Philippines. That year, cigarette consumption was placed at about 3.3 billion packs of smoked cigarettes based on the survey respondents’ declaration of tobacco consumption level.

That same year, however, the government racked up tobacco taxes, one of the so-called “sin taxes,” accounting for about 4 billion cigarette packs.

“That’s an 800 million-pack difference!” Yurekli said. “In other countries, what we find is that consumption is usually higher and tax paid is less… meaning there are smuggled [cigarette products],” she said in an interview with GMA News Online.

“But here in the Philippines, they smoke less but they do pay [higher] taxes,” Yurekli added.

Though admitting further studies and investigation are required to prove it, her hunch is that the excess cigarettes do not benefit local consumers but end up being puffed abroad.

“They don’t mind paying extremely low taxes here. They pay local taxes then they smuggle out,” Yurekli said, adding that such practice has long been observed in countries like Russia and Ukraine.

And there seems to be a huge demand for imported tobacco products coming from the Philippines in neighboring countries like Thailand, Indonesia, Brunei, and Taiwan.

“We have reports that smuggled cigarettes in southeast Asian countries are originated from the Philippines. I didn’t believe in that before—China is the usual main source—but once I compared, I found there was a huge difference [and that it was true],” Yurekli said.

That is precisely why the WHO organization has been backing House Bill 5727, an amended excise tax reform measure authored by Cavite Rep. Joseph Emilio Abaya which simplifies the excise tax system and indexes the taxes against annual inflation, through a two-tier tax system. The bill passed through the House of Representatives in May.

The government has said the bill promises to provide the government with an additional P33 billion in revenues. But more than the revenues, Yurekli said passage of the bill into law could cut cigarette consumption in the Philippines in half in the next five years. The country currently has about 17 million smokers, she said.

“These are the most important major public health impacts of the amended Abaya Bill. It is very revenue-friendly as well as public health-friendly,” Yurekli said.

She also suspected that the tobacco industry is overproducing tobacco products now to get away with higher taxes in case the Abaya Bill gets enacted into law. “They do the frontloading before tax increases takes place so they can pay less taxes for at least a year or so,” she said.

However, Yurekli, who has been actively meeting with Philippine officials, particularly from the Department of Finance, and extending technical support to improve the efficiency of the country’s tobacco tax system, is optimistic about the support of the government for the Abaya Bill.

“What is interesting and very good is that President Benigno Aquino III is very committed and he cares so much about the lives saved by tobacco taxes and he also cares about the youth,” Yurekli said.

“From that perspective, he is very unique when I compare the Philippines with many countries and it is a great opportunity for the Philippine government,” she added.

Yurekli commended the President for having “a good public health mentality.” “It is very rare and many governments have to choose the more financial side of the investment and sometimes they give their priorities on public health later on when they already paid the price,” she said.

She said the WHO has already gotten assurances from senators who would help ensure the passage of the amended sin tax bill.

Yurekli said the Abaya bill would also benefit the often overlooked tobacco farmers, saying that the government estimates that 15 percent of sin tax revenues from the proposed tax system will go to the farmers. — BM, GMA News

Customs officers have seized illicit cigarettes worth HK$3.3 million and arrested three suspected smugglers in Tsing Yi, the government announced on Thursday.

A customs spokesman said the haul involved 110 boxes holding a total of around 1.3 million sticks of duty-not-paid cigarettes. The cargo is worth about HK$3.3 million and the duty potential on the cigarettes is HK$2.3 million.

Customs officers discovered the illicit cigarettes on board a cross-boundary container truck and a local lorry, which were stopped at the roadside of Tsing Yi Road on Wednesday.

The officers spotted three men behaving suspiciously while moving the boxes from the container truck to the local lorry, and discovered the illicit cigarettes in the two vehicles, the spokesman said.

The three men, aged 23 to 55, were arrested and the vehicles seized.

The men are members of a syndicate that is trying to smuggle a large number of illicit cigarettes into Hong Kong before the Mid-Autumn Festival and the National Day holidays – which will occur in less than two weeks – the spokesman said.

The syndicate has refined its methods of smuggling in trucks and delivering the illicit cargo to customers in Hong Kong, he said.

“These cigarettes were sorted and packed in different types of packaging, according to local orders, for quick delivery to the black market. A large quantity of genuine cargo was used as camouflage, to prevent customs officers from detecting them,” the spokesman said.

Possessing or dealing in illicit cigarettes can lead to a two-year jail sentence and HK$1 million fine under the Dutiable Commodities Ordinance.

The seizure coincided with a high-profile crackdown this week against cross-border parallel goods traders near the mainland border.

20 Sep 2012. South Africa is exploring cigarette plain packaging and will issue a report on its feasibility by the end of this year, SAPA press agency said in a story citing Department of Health Director of Promotion Vilma Moodley

Graphic warnings for cigarette labels may also be instituted, she reportedly said in testimony before a health panel of Parliament. Following favourable review, the new regulations could be in place as early as next year, SAPA cited Moodley saying after the parliamentary briefing. A complete ban on smoking indoors in public places, eliminating smoking areas, and on outdoor smoking in some forms of outdoor areas will be proposed, Moodley said. (pi)

Every year, the Toronto International Film Festival, one of the most renowned film festivals in the world, comes to that city. For a couple of weeks, Toronto is transformed into a celebration of some of the best in upcoming films. Yet there is one aspect of current movies that should not be celebrated: the high level of smoking and tobacco use that continues to appear in children and teen-rated movies in Ontario (G, PG, 14A).

Smoking in youth-rated movies is a serious public health issue. A significant body of research is in agreement that the more that youth see smoking in films, the more likely they are to start smoking.

One of the reasons tobacco’s portrayal in film is so deadly is that it typically fails to reflect reality. It is often glamourized by actors and actresses and rarely are the serious health consequences ever shown. A simple solution to this problem exists: Ensure all future movies rated for children and teens in Ontario are tobacco-free.

To be clear, no one is suggesting re-rating movies already produced.

Within Canada, the tobacco industry is restricted from advertising or promoting its products in most media, yet millions of tobacco impressions continue to be delivered to children and teens through movies annually. In 2011, 85 per cent of movies featuring tobacco were assigned a child or teen rating (G, PG, 14A) by the Ontario Film Review Board (OFRB). This resulted in the delivery of 509 million impressions to children and teens through theatre viewings alone. When you consider the amount of blu-ray and DVD movies children and teens watch, this number is even larger.

The OFRB has the power to make youth-rated movies in Ontario smoke-free, but they have opted not to. The OFRB is responsible for rating movies in Ontario based on a variety of criteria, such as violence, substance abuse and nudity among others, but smoking and tobacco use currently have no impact on a movie’s rating.

As a result, the animated feature Rango was rated PG in Ontario even though more than 50 instances of tobacco use and imagery were included.

The OFRB’s response to this issue has been to include a tobacco use advisory within the movie’s description, which is insufficient and unlikely to prevent youth smoking initiation.

We should be asking ourselves if we are being adequately served through this OFRB tobacco content advisory. Will it help make a more informed choice? Perhaps, but do you want to constantly be scrutinizing every film your children watch to ensure they aren’t being negatively influenced by smoking? Doesn’t it make more sense to simply exclude tobacco from youth-rated movies in the first place?

At the end of the day, what value is there in allowing it? Would anyone really miss it? Did anyone miss it in The Avengers? Did it hurt movie sales or audience enjoyment? This is doubtful, based on the film’s ticket sales.

The evidence-based global policy consensus supports an adult rating (18A in Ontario) for movies with smoking and tobacco use. The World Health Organization, the U.S. Surgeon General, the U.S. Centers for Disease Control, Public Health Ontario’s Smoke-Free Ontario Scientific Advisory Committee and Ontario’s Tobacco Strategy Advisory Group all call for action to reduce onscreen smoking.

The only instances where smoking and tobacco should ever be allowed in a youth-rated movie is when the character being portrayed smoked or used tobacco in real life or when a movie explicitly shows the harmful health consequences of tobacco. All other forms are gratuitous and damaging to public health.

It is time to stop allowing the recruitment of a new generation of smokers through tobacco use in children and teen rated movies (G, PG, 14A). By ensuring all future movies rated for children and teens in the province are tobacco-free, we could help reduce youth smoking initiation and prevent some of the 13,000 lives lost annually in Ontario due to tobacco-related death and disease.

OSLO, Sept 14 (Reuters) – A Norwegian court has upheld a ban on displaying tobacco products in stores, in a closely-watched ruling as governments across the world look to crack down on smoking to improve public health and cut medical costs.

The court on Friday rejected a complaint by Philip Morris , maker of Marlboro cigarettes, which argued the ban violates a free trade agreement linking non-EU member Norway to the European Union’s market rules.

Philip Morris said it might appeal.

The court said the display ban did not constitute a barrier to trade, and could be justified for public health reasons.

“As the court sees it, the display ban is necessary and that there are no alternative, less intrusive measures that can have equivalent results,” it said.

The ruling is being followed by countries including Britain, New Zealand, Canada and India, which are considering similar measures to help fight smoking.

Tord Dale, political advisor to the Norwegian Health Minister, said: “We are glad that the court has decided that looking after people’s health is more important than the profits of the tobacco industry.”

Since 2010, cigarette packets and other tobacco products have been covered up in Norwegian shops and are not visible to buyers, as part of a drive to discourage tobacco use.

In April, Britain implemented a similar ban for large vendors, while smaller vendors have until 2015 before having to conform to the legislation.

The European Commission is due to propose a revision of EU rules on tobacco products by the end of this year, which is widely expected to include more prescriptive requirements for health warnings on packets.

A Commission spokesman said the proposals would include new rules on packaging, but declined to comment on media reports the plans will introduce a single pack size for all cigarettes and require warnings on the health effects of smoking to cover 75 percent of the pack.

Norway’s decision to rebuff Philip Morris’ complaint comes less than two months before the fifth round of negotiations on the World Health Organization’s global tobacco treaty in Seoul, South Korea, in November.

“We are not happy with the ruling,” said Philip Morris spokesman Nordan Helland. “We will now look carefully at the court’s decision and assess if we are going to appeal.”

Norway has said that if the ban was upheld it would follow Australia and require plain packaging of tobacco.

“I know that this ruling will be read carefully in other European countries,” said Knut-Inge Klepp, director at The Norwegian Health Directorate.

“Currently we are waiting for a new strategy from the government on tobacco legislation. We are in dialouge with other European countries on the issue,” he added.

Australia’s landmark decision means that from Dec. 1, cigarettes and tobacco products must be sold in plain olive green packets with graphic health warnings, such as pictures of mouth cancer and other smoking-related illnesses.

OPINION: YOU CAN say one thing for the tobacco industry. Despite the fortunes they spend trying to hijack public health policy and manipulate public opinion, at least they don’t pretend to care about those their products kill and maim. Profit matters, people don’t.

Once the industry is viewed through the prism of this wanton disregard for human life, it is difficult to fathom how anyone could fall for their self-serving propaganda. But time and again, well-meaning people do.

Tobacco companies know that to maintain profits, they must replace about 50 smokers every day in Ireland who either die, or manage to quit. Teenagers are the main target for this lethal treadmill.

Industry strategists and their PR gurus have seized upon Ireland’s tobacco smuggling problem as the best vehicle to meet this objective. Not out of any public-spirited abhorrence of criminality, clearly. But because they can use the issue to oppose tax increases that stop young people smoking and transfer vast sums from their coffers to the public purse.

Their tactics are simple: Exaggerate the extent of the problem and its impact on the retail trade; discredit proven research about the impact of tax on smoking; and peddle the ludicrous notion that legal cigarettes – which contain 4,000 chemicals including substances used in the manufacture of rat poison and rocket fuel – are somehow “healthier” than contraband.

In The Irish Times last week, Eugene Regan (Opinion Analysis, September 7th) takes up much of the industry agenda, in a piece that is frankly shocking in some of its misleading assertions. It gains no credibility from his blind preference for distorted industry statistics over infinitely more reliable Revenue figures. He even asserts that illicit cigarettes are of “particularly toxic quality”.

Does that mean legal cigarettes which kill more people than the next six biggest causes of preventable death put together, including alcohol, obesity and illegal drugs are not particularly toxic? But it is his central thesis that would be most dangerous if any policymaker was ill-informed enough to listen – that tax increases don’t reduce smoking and duty per pack of cigarettes should be cut by €5 to eliminate the illicit trade. All credible research, including by the World Bank and World Health Organisation, has shown that taxation is the biggest weapon in tobacco control, with a 10 per cent hike yielding roughly a 4 per cent decrease in smoking rates.

This was borne out just last Monday when it was revealed that a 22 per cent US tax increase imposed by President Barack Obama has resulted in three million fewer smokers and reduced the rate among teenagers by 10 per cent.

At home, Irish Heart Foundation research shows that a €1 increase per pack would result in 30,000 people quitting. It would be simplistic to reverse this calculation and conclude that a €5 cut would create 150,000 new smokers. But on the basis that tobacco kills one in two smokers, it’s not hard to imagine a death toll that would ultimately reach the tens of thousands.

Any tobacco tax cut must therefore be ruled out on health grounds alone. But there are other reasons why such a policy wouldn’t work. International agencies conclude that factors including weak enforcement and entrenched criminal networks are chiefly to blame for high smuggling rates. This is backed up by many examples of low-tax countries with high smuggling and high-tax countries with low contraband rates.

Studies here also show that smuggling levels – estimated at 14 per cent by Revenue – have remained stable during periods of major tax increases. And anyway, sacrificing the vast majority of tobacco revenue via a €5 tax cut to recover a relatively tiny portion of income makes no financial sense. But the real issue isn’t about reducing tax. It’s about the proven fact that you can use tax increases to deter young people from smoking and reduce smuggling rates at the same time. And about why that’s not happening in Ireland.

Our template for action is provided by the UK which had roughly the same smoking and smuggling rates a decade ago as we have now. By combining high regular tax increases, tough anti-smuggling measures and effective stop-smoking strategies, they now have two million fewer smokers, including a 50 per cent reduction among children, while the illicit market has fallen from 21 to 12 per cent. And for an annual outlay of £300 million, tax revenues have risen by £1.2 billion, whilst health service savings total £1.7 billion.

Tax increases alone can’t be fully effective because cheap smuggled tobacco blunts their impact. We must give Customs, which has lost hundreds of staff in recent years, and the similarly hard-pressed Garda, the manpower and equipment, along with the tough justice in the courts, required to deal with smuggling. And we must give greater support to free more smokers from the grip of addiction.

If such co-ordinated action is taken we can effectively tackle the health catastrophe that costs this country one of its citizens roughly every 90 minutes and massively increase tax revenue and cost savings for Ireland’s cash-starved health service.